Can someone explain to me what PPP and GDP are in laymens terms and how they are relevent to us?

Question

This is not a homework assignment I just see them so much, and I dislike being ignorant.

Answer 1

GDP: gross domestic product, it measures how much a country produces in a year.  It's important because it tells the strength of a country's economy and growth rates tell us the state of an economy (e.g. expansion or recession).  Per capita GDP, GDP divided by population, gives a country's income level.

PPP: purchasing power parity, used to compare figures such as GDP across countries by measuring how much can be bought for a given amount of money as opposed to using the exchange rates, which can be manipulated.  Generally gives a more accurate picture of an economy than exchange rate method.